WASHINGTON -- January 26 -- As President Bush prepares his highly anticipated plan to overhaul Social Security, a consortium of influential trade associations and corporations is working to gain support for what has become the administration's most aggressive second-term domestic policy item.

The Alliance for Worker Retirement Security is the leading business coalition backing Bush's proposal that would allow workers to invest some of their Social Security payroll taxes in private investment accounts. The Alliance's 35 members include representatives of industries that could profit enormously from such a plan, including the Securities Industry Association, Wall Street's main trade group, and PaineWebber -- now called UBS Financial Services and one of the biggest campaign contributors in the securities and investment industry.

The Alliance also includes powerful business groups such as the U.S. Chamber of Commerce and the National Federation of Independent Business, computer company Hewlett-Packard, pharmaceutical giant Pfizer and two lobbying groups funded in part by drug makers: the 60 Plus Association and the United Seniors Association.

Combined, the Alliance members have donated $34.6 million to federal candidates and political parties since 1999. Of that, $25.8 million went to Republicans, including $972,000 to Bush for his two presidential campaigns. In addition, Alliance members spent nearly $108 million lobbying the federal government during 2003 and the first half of 2004.

The Alliance is headed by Derrick Max, who has worked as a Social Security specialist for the National Association of Manufacturers. NAM, the nation's largest industrial trade association, founded the Alliance in 1998 and remains a member. Max succeeded Chuck Blahous, who left the Alliance in 2001 to serve as special assistant to President Bush for Social Security reform.

Max, who gave $250 to the Bush campaign in 2004, called the Alliance's lobbying efforts "typical Washington stuff" and added that the Social Security debate is "not really a money game."

"Our effectiveness is not in our money," Max said. "The effectiveness is in the companies that lie in our association and the companies that are associated with those companies. I think that as the debate gets going further, you'll see a more grassroots campaign."

Bush made Social Security reform a central part of his campaign for reelection. He has proposed to overhaul the system by allowing workers to voluntarily invest a portion of their 6.2 percent Social Security payroll tax in private investment accounts.

Bush, who has been busy of late preparing for last week's inauguration and next month's State of the Union address, has not yet issued a formal plan for reforming Social Security. The White House could release a proposal by March. The debate in Congress is expected to be fierce, with some lawmakers speculating that Social Security reform could become the biggest and most expensive lobbying battle since President Bill Clinton's failed proposal to reshape the nation's health care system in 1993.

Opponents of private investment accounts, including many Democrats, argue that privatization would be too costly to implement. They add that the accounts would be boon for the securities and investment industry, which contributed more than twice as much money to Bush ($8.1 million) than to Democrat John Kerry ($4 million) during last year's presidential campaign.

For its part, Wall Street has yet to fully endorse Bush's proposals. Some investment analysts have said the fees associated with private accounts might be too small to provide much of a financial windfall.

As a member of the Alliance, however, the Securities Industry Association has made its support for private investment accounts unequivocal. The SIA has contributed $2.1 million to federal candidates and political parties since 1999, of which $1.2 million went to Republicans. Additionally, the association spent more than $10 million on lobbying from January 2003 through June 2004.

Leading the charge against the Alliance is the seniors' lobbying powerhouse, AARP. In a December letter sent to its 35 million members, the organization acknowledged that Social Security is in need of fixing but was in "no danger of going broke." The group estimated that diverting money into private accounts could cost as much as $2 trillion.

John Rother, AARP's director of policy and strategy, said the group has not set a limit on how much it will spend in opposition to privatization.

"This is our signature issue," Rother said. "It's the No. 1 issue for our membership, by far. We'll devote whatever it takes, everything we can think of."

Earlier this month, AARP began a $5 million national advertising campaign to highlight its concerns about Social Security reform.

If history is any guide, AARP will be willing to spend much more than that. In 2003, the group reported spending $20 million to lobby for the Medicare prescription drug benefit endorsed by President Bush.

AARP, which is opposing the president this time around, will be looking for help from organized labor and its allies in the Social Security fight. Labor unions contributed $52.7 million in individual and PAC contributions to federal candidates and political parties in the 2004 election cycle, 87 percent to Democrats. So-called 527 groups affiliated with unions spent $101 million more during the cycle, much of it in support of Kerry.

Supporters of Social Security reform also are gearing up for battle. The conservative Club for Growth hopes to raise $15 million for its effort in support of private accounts. Stephen Moore, the group's recently departed president, told the Washington Post that the total price tag for the movement to reform Social Security would be up to $100 million.

This article, along with related charts and links, may be found on the Center's Captal Eye Web site at <http://www.capitaleye.org/inside.asp?ID=153>

Research by Sheila Krumholz, written by Courtney Mabeus

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